The Earnings Test in Regards to FERS

The FERS program is meant to help supplement a former federal employees retirement should they retire before the pension age of 62. Other potentially eligible FERS recipients include law officers that meet special criteria and employees under VERA retiring after they’ve reached the Minimum Retirement Age.

FERS payout amounts vary, but it could be found by taking the worker’s estimated earnings through Social Security at age 62 and multiplying that by the years of service they put in under FERS. Then you divide that number by forty. There are no cost of living or inflation adjustments made on the FERS supplementation.

In 2019, 17,640 dollars is the most a retired person can make before their FERS amount is reduced, at a rate of 2 dollars made to every 1 dollar reduction over that threshold amount. This amount is only counted from wages earned, and things like the FERS supplement and annuity, any investment earnings, TSP, IRAs, vacation and leave payouts, and any money made from real estate endeavors do not count.

The RI 92-22 form is the one that a retired person would have to fill out if their earnings pass that 17,640 dollar mark, with any FERS reductions, applied each year in July for the year prior. 401K contributions are also included in the earnings test, with no flexibility on changing those particular earnings.

Law enforcement officers have a special exemption from the earnings test and can collect supplemental income if they retire with 25 years under their belt, or reach the age of 50 with at least 20 years of service behind them. This is because, by design, they are made to retire before they reach the FERS determined minimum retirement age. Once retired, a law enforcement officer can make as much money as they want until they hit that 62-year-old threshold at which case they are subject to the same earnings test as any other employee who recently retired.

Even though the FERS amount is determined by your Social Security, that money will not be affected by collecting a supplement. It might be a smart move to keep the money earned under the limit allowed before reduction, and familiarity with the FERS program and your retirement age are something everyone should know.

FERS Federal Employee Retirement Earnings